All of the Following Statements About Secondary Credit Are True

question 48

Multiple Choice

All of the following statements about secondary credit are true EXCEPT

• A)it may be used to expand a bank's assets.
• B)the secondary credit interest rate is set above the primary credit rate.
• C)it is intended for banks not eligible for primary credit.
• D)borrowers of secondary credit are less financially healthy.

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Definitions:

Adjusting Entry

A journal entry made at the end of an accounting period to allocate income and expenditures to the correct period.

Interest Expense

The expense recorded by a business for the funds it has borrowed, categorized as a non-operating expense in the income statement.

Interest-Bearing Note

A debt instrument that obligates the issuer to pay interest to the holder, in addition to repaying principal at maturity.

Adjusting Entries

Journal entries made in accounting records at the end of an accounting period to allocate income and expenditures to the period in which they actually occurred.